Oil prices rose on Monday on fears of a widening conflict in the Middle East curtailing Iranian crude supply, but prices were headed for a third straight monthly loss because of concerns about waning global demand.
Brent crude futures for November delivery, expiring on Monday, gained 1 cent to $71.00 a barrel as of 11:11 a.m. EDT (1511 GMT). The more actively traded Brent contract for December delivery was up 69 cents to $72.23. West Texas Intermediate (WTI) futures rose 63 cents, to $68.81.
Brent was headed for a about a 9 per cent month-on-month loss, which would be its biggest decline since November 2022. WTI was set to decline more than 6 per cent since the end of August.
On Monday, prices had been supported by the possibility that Iran, a key producer and member of the Organization of the Petroleum Exporting Countries (OPEC), may be directly drawn into a widening Middle East conflict.
Since last week, Israel has escalated attacks, conducting strikes which have killed Hezbollah and Hamas leaders in Lebanon and hit Houthi targets in Yemen. The three groups are backed by Iran.
“We suspect that some oil market participants will look past this escalation given that there still has not been a major physical supply disruption and Iran has not demonstrated any appetite to enter this nearly year-long conflict,” said Helima Croft of RBC Capital Markets.
Oil prices also had a muted response to Beijing’s announcement last week of fiscal stimulus measures in the world’s second-biggest economy and top oil importer.
Traders question whether the measures would be enough to boost China’s weaker-than-expected demand so far this year.
Concerns about rising global crude supplies are also weighing on prices for the month.
Oil prices slid last week on a report that Saudi Arabia, which is the defacto leader of OPEC, was preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output.
“We are proceeding on the premise that last week’s Saudi decision to ramp up production in December will be an overriding bearish consideration to this market for weeks to come,” said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.
Data on Monday was not encouraging for demand, showing China’s manufacturing activity shrank for a fifth straight month and the services sector slowed sharply in September.
The prospect of Libyan oil output recovering was also weighing on the market. Libya’s eastern-based parliament agreed on Monday to approve the nomination of a new central bank governor, a move that could help end the crisis that slashed the country’s oil output.
